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Innovation is key to enabling future success. But development costs can quickly eat up the benefits of the growth in sales and profit generated. This is one reason why more companies are reshuffling their internal capabilities to rely on a cadre of well-chosen partners—especially suppliers—to pursue profitable, value-building growth.
If managed successfully, collaborative supplier innovation can produce profitable growth via improved differentiation and speed, and lower costs (see figure 1). Suppliers provide ideas, reduce development costs and time, reduce COGS, and pave the way to a price premium.
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